Understanding Ex-Gratia: Is It Legally Required Alongside Your Bonus?

Hi everyone,

I have a query regarding the bonus. The minimum bonus limit is 8.33%, and the maximum is 20%. However, I am not sure about ex-gratia and when it is applicable. Is it mandatory by law to pay ex-gratia or not? Please help me out.

Regards,
Pooja Verma :( :cry: :( :cry:

Hi Pooja,

Ex-gratia amount is not mandatory to pay. It depends on management's wish. If a company is paying more than 8.33%, then the balance excess amount more than 8.33% is called ex-gratia. Sometimes companies pay bonuses to employees who are not covered under the Payment of Bonus Act; that amount is also called ex-gratia.

Hope this clarifies.

Regards,
L.C. Pal

Hello,

It is the Payment of Bonus Act 1965 that has defined the concepts, terms, and rules regarding "Minimum Bonus" and "Maximum Bonus". Any payment made in conformity with the stipulations of this act is called "Bonus under the act", and those who are covered by the act receive it as per the provisions of the act.

Ex-gratia, as the name reveals, is something "gratis", meaning "by free will without any strings attached". In our context, either when the bonus is not payable under the act due to its non-applicability, or in addition to any amount payable as a bonus under the act, if an employer "wishes" to pay for whatever reasons, then it will be called "ex-gratia".

Bonus has to be paid only in conformity with the provisions of the act, and ex-gratia is a purely revenue payment.

If the concept is not clear or you need to ask more questions, I will try to satisfy your desire to seek answers!

Regards,
Samvedan
October 21, 2007

Hello,

I'm working with a private shipping company. Do we need to give bonuses to our employees even though we are not covered under the Payment of Bonus Act?